Joe Antos

Welcome to The Puck, Venture Capital and Beyond, a show that examines the changing landscape of our world. Before we dive in, a quick word about who I am and why we're here. I'm Jim Bier, corporate lawyer and restructuring professional. I've spent the last two decades helping companies navigate their toughest transitions. And about eight years ago, I found myself having fascinating conversations with clients and friends about everything from venture capital to the broader shifts happening in our economy and society.

Those discussions were simply too good, so the puck was born. Now while we started on venture capital, hence the podcast name, the Puck Venture Capital and Beyond, We've naturally evolved to focus more on the and beyond portion of the title. Today, we explore how business intersects with the bigger forces shaping our world. I still run my restructuring practice by day, but now I get to host these conversations by night. It has become one of the most rewarding parts of my life.

Today's guest continues that tradition. We have a system that is really under pressure, but it has created its own pressure. We've been arguing about health care in America for decades, but the real issue isn't just left versus right. It's the trade offs we need to make. Every health care system has them.

Who pays? Who gets access fastest? How much innovation we support and how much we're willing to spend? So the real question is, how do we balance it? Today in the Puck, economist Joe Antos joins me to walk through the numbers.

The doctor shortages we helped create, the incentive shaping the system, and the Medicare math that's getting harder to ignore. There's a lot to cover, so let's get to it. Joe Antos, welcome to the puck. Thank you very much. So, Joe, before we jump in, can you just take a moment?

And for our listeners who aren't familiar with your work, give us just a little bit about your background. Well, I have to confess that I'm an economist, but I will try not to be, too much of an economist today. I work at the American Enterprise Institute, which is a somewhat right of center think tank in Washington. I think many of the listeners have heard of the Brookings Institution, which I would say is a somewhat left of center think tank. And we are literally right next door to each other, and I think both physically and also in many ways in terms of philosophy.

I knew the organization is ready to tear down the walls. Let's put it that way. But before this, I I spent many, many years in various jobs in the federal government. I was, part of what is now called the Centers for Medicare and Medicaid Services, involved heavily with the the Medicare program and experimentation. I was at the office of manage management budget.

I was at the congressional budget office. I've got a lot of numbers in my background, but occasionally, I have a verbal thought too. There you go. Well, and I won't hold it against you that you're an economist. We we like economists.

And at the end of the day, you may not all agree on things, but it's a good way to kinda get practicality out on the playing field. Well, I can't avoid it really. Your point about, you know, can we continue on like this? The answer is absolutely not. But the answer is, in many ways, not what people talk about.

Certainly not in Washington, but also not what the average person thinks is is a solution either. It's it's not more subsidies. It's a smarter health care system and greater efficiency and, frankly, moving the federal government away from trying to control everything. That's been a large part of the problem. So let's let's get into practicalities.

I mean, we we acknowledge that the system seems to be broken. I mean, are we talking about moral failure? Are we talking about specifically a mechanical failure? I mean, how how do you frame the issue? Well, it depends on what part one considers, broken.

So you mentioned, coverage, and certainly having insurance is is very important. People should have insurance. I think everyone should have some form of insurance. Insurance, in theory, should give you access to care. Well, the problem is that just because you have an insurance card doesn't mean you can get an appointment.

And if you get an appointment with the primary care doc, for example, that doesn't necessarily mean you're going to get or or any other kind of, medical professional for that matter. Doesn't necessarily mean that you're going to get appropriate care for your specific circumstances. So we have a we have a system that is really under pressure, but it has created its own pressure. I would argue that a lot of what the average patient, which includes me, have to complain about, beyond cost, which is obviously something that we all complain about, is lack of customer service. I'm not a patient, damn it.

I'm a customer. Well, that's not what the health system, that's not how the health system wants to treat me or anybody else. There's a reason why they we're called patients. It's because we're sitting behind a door waiting for a doctor to give us our his full fifteen minutes of of attention. And why is the door closed?

Well, it's because there's a piece of paper on the outside of the door which tells the doctor what my name is and something vague about why I'm there today. So this is the kind of personalized care that that we get in this country. And this is the reason why I think we start off with a bad feeling, and then we work our way down from there. It's not just cost. It's also the way people are not treated with sufficient concern for their issues rather than the system's issues.

And is that because there is a shortage of doctors? Absolutely. And one might ask, why do we have a shortage of doctors or let's say medical professionals in general? So on on physicians, I think the federal government gets all of the credit for this mistake. Several decades ago, they decided to regulate the process by which, physicians make it through the last stages to become a doctor.

There's a residency requirement. Right. So in other words, they've gone through medical school, but now it's, kind of a practical allegedly practical process associated generally with a hospital. Now that seems like a reasonable thing to do. The problem is that the federal government limits the number of residency residencies that are available.

So that means that there are, every year, there are people who have completed medical school, did quite well, but for one reason or another, were unable to get a residency, which means they cannot practice medicine. They put all the effort into learning the material. They need the practical experience with their residency gives. Their federal government prevents that for, I think, what was thought to be fiscal reasons. They've got it exactly wrong.

As you know, the fewer physicians there are, and the more demand there is, the higher the price is going to be. I mean, that's just simple market economics. Same thing with eggs. You know, in the supermarket, when the when the chickens were dying off from from, bird flu, the price of eggs went up. Why?

Well, because the producers were no longer in action. Let's put it that way. Well, we need more producers in the health care sector, and that means we need more physicians. But we also need to be smart about the other highly skilled practitioners, nurses in particular. There are many levels of nurses.

There are advanced practice nurses. And one of the more annoying aspects of this is that because medical associations don't like or, frankly, nobody likes competition. In most states, there are limitations about what advanced practice nurses can do. That is really inappropriate, I think, from a scientific standpoint, and I'll I'll give you an example. Sure.

You know, we have medical technology has been booming. And one of the aspects of improvements in in medical technology is that, things that used to require incredible amounts of training and expertise and and hand hand strength and, you know, agility, that sort of thing. I know surgeries, used to be for for many kinds of surgeons, used to be, you know, very, very complicated, and and the surgeon needed to have many, many years of experience and so on, and things didn't always go well. Well, think about, heart surgery in particular. We used to, have open heart surgery.

Now we hardly have any open heart surgery. And instead, what happens is that you can put a stent into an artery, and that will open up the blood flow and prevent, any further, problems until possibly something else happens. But living on in the era of, stenting cardiac patients, you needed a very skilled physician. Now it's done through a catheter in your arm. It's a very straightforward procedure.

It does not require a heart specialist and generally isn't done by a heart specialist. You know, the diagnosis, that's another matter. But doing the stent has become a more mechanical kind of a process. Thank god for that. We've saved a lot of people because of that.

And theoretically, we should have saved a lot of money. We haven't saved a lot of money, but, we have certainly saved some lives. And the fact is that we need to take advantage of these improvements by taking a closer look at what is really required on the person power side of the issue, as well as the, you know, the equipment, the drugs, and so on. We have to look at the doctors, the nurses, and others and ask ourselves, well, do we have this set up in the right way and our for success? Not just success for now, but for success in the future.

Things are gonna be changing. And are we really do we really wanna stay with old ways that are incredibly inefficient? We're very slow in the health sector at adopting efficient methods that reduce the pressure on the on the on the labor side. It seems like, at least from what I've been hearing and reading, that with robots getting more and more prevalent and with all this now new AI in terms of radiologists being able to look at reports and so forth. It does seem like the technology is bursting at the seams.

Are is that going to add I mean, I'm I'm assuming it's gonna add a real layer to this that should should in the short run or to the long run help? In some ways, yes. In in other ways, possibly not. Okay. Here's here's a way to to here's one way to look at it.

If we had systematically collected data on all the patients in the hospital Right. And we had good data systems that actually kept track of this, then we would be able to train AI to do various sorts of things. Right now, I think AI is in is reasonably well positioned to take over some basic paperwork requirements. Right now, at least for people who who see doctors in big cities, but I think probably it's it's generally true across the country. The doctor is no longer taking notes because there is a recording, system, and it's it is basically a computerized way to take the notes Sure.

That is generally going to be more accurate than a doctor trying to scribble and listen at the same time. So that kind of thing and billing, obviously, you can you can also automate that far better than, you know, has been in the past. In the era of, kind of checking the test to see is there a problem or not, obviously, the first application that people think about are images. And in particular, you know, if you have you're looking for, cancerous tumors and you're looking at, MRI, images. These are blurry kinds of images.

No matter how good the machine is, it requires a lot of judgment. And, of course, that judgment can be trained into to AI. And so AI is moving into this air area. Although, at least so far, and I think appropriately so, the specialist looks at it again. AI is gonna pick out some things.

It's liable to pick out some things that are not important, but it's also liable to pick up some things that the human eye might miss that is important. So this combination of, human and machine is very good right now because, frankly, AI isn't that good at it. But, eventually, it will, you know, it'll be a Star Trek experience. Right. Again, that's a good thing.

However, what we're really missing here is that computers and AI, what can it what can it do? It can speed up things that we do that in many cases we shouldn't be doing in the first place. We're speeding up our ability to be inefficient, certainly, on the paperwork side, but also on the on the medical side as well. And and a large part of the problem is, again, the manpower problem. Because of Medicare rules, we have reduced the number of physicians that we could have today for reasons that, you know, one might think there there are, reasons from related to the influence of, medical associations who wanna protect their members, who wanna protect their incomes.

You can think of that. Think there's some element of truth in that. But, also, I think it's just basic bureaucratic incompetence on the part of the federal government. This rule may have made some sense to somebody. I think it was about, sometime in the seventies.

Well, that's been fifty years, and maybe we ought to take a look at it again. And that's true about a lot of a lot of rules that we have in the Medicare program and and other rules at the state level that that affect the way medicine is practiced. So, you know, what do we wanna do? Do we wanna speed up and make more efficient things that probably we shouldn't be doing or things that really are of low value in terms of, medical care? Or do we want to find ways to make good medical care more affordable to people?

And the answer to that is not more subsidies for insurance, but take basically the blinders off of the system and let those young people who've gone to medical school actually go the rest of the way. It's actually cheaper in the long run, and it's better care in the long run as well. And that's where we should be going. So, Joel, let's stay with that for a second because you're saying something that sounds a little counterintuitive to me, which is we have a certain number of people that come out of medical school. And are you saying there's enough people coming out of medical school that's not where the shortage is?

It's really the shortages they can't get their residences completed? And so that there's these doctors sitting out there where they just can't get through the system? Or does the system ultimately catch up? It's it's it's a residency problem, and it obviously, it hasn't caught up. It clearly hasn't caught up.

We've been talking about in the in, you know, in the economics health economics literature, and I think in movie in the in the popular press for that matter. We've been talking about doctor shortages for forty years that I can think of. No. Joe, I understand that, but are there thousands of doctors that haven't been able to get their residencies completed? I mean, we have 330,000,000 people in this country.

I mean, you know, a couple 100 people that haven't completed their residency is not gonna change the entire health care system. I mean, I can understand, like, with lawyers, we have a lot of law schools and we have a lot of people going through law school, and not everybody passes the bar, but we do not have a shortage of lawyers. We do have a shortage of doctors. And so it seems to me, is it is the bottleneck the people coming out of medical school, or is it that we got a lot of doctors that can't get their residencies completed? Well, over the course of, how which long and long it's been, let's call it forty years.

Over the course of forty years, yeah, it is accumulated. You know, what happens by the way, what happens when somebody can't get a residency? What they what they generally end up doing is taking a, non physician job in the in the health sector. Now this is crushing the spirit of somebody who really put a lot of effort into it. But what it also does is it sends a signal to other young people.

What what we're beginning to see, I think, more clearly than ever before is that becoming a physician isn't quite the job that people used to think it was. You know, dad was a physician. That's what I wanna do. Now these days, dad was a physician. I wanna go into computers.

The hours are better in theory. The pay is better. I don't have to wash my hands every five minutes. It's that kind of thing. So we need to one of the reasons to to deal with this is not only to get more services to more people in a better way, but also to make it more attractive for smart people to go into the business in the first place.

So let's let's switch for a second. When when we look at the health care system and we look at, as you were talking out about the shortage of doctors, I get that. But we also have a situation where these drugs are very, very expensive, the reimbursement rates are all messed up, and you've got a situation where the system's not actuarially sound. If you were to say from the perspective of what one thing we could do where you see some optimism and hope and where there's really some movement towards fixing it, What's what's a big issue that we can wrap our arms around to kind of improve things? Well, you know, I have to speak as an economist.

We need to find ways to restructure subsidies and payments and restructure the way insurance operates and restructure the way people interact with insurance so that it promotes appropriate use of health care services, reduces excessive payments. You You know, this is gonna be an economist's answer. Other people are gonna have more kind of physical things that they would wanna do. But from an economist standpoint, you know, those financial incentives draw a lot of the good and a lot of the dumb things we do in this country. If we're going to improve things, we have to change those incentives.

So to give an example, health insurance, what do people think health insurance is? Most people have insurance, sponsored by their employer. The view is that I paid my premium, and now I have to get my money back. Right. And so that means a proliferation of trips to doctors, a proliferation of other kinds of utilization is really probably not called for because, you know, I paid my money.

I've I I I wanna do more than breakeven. That's generally what how people think about it. They're not really considering that, that doesn't necessarily mean just because you paid and that paid insurance, they did an insurance premium. That doesn't necessarily mean that in that year, you should be getting all your money back. In fact, insurance doesn't work that way.

If everybody with health insurance got all their money back plus a little sum at the end of the year, insurance companies would go out of the business of selling health insurance. It just doesn't work that way. The way insurance works is that you need some people who are using the service. We could call them sick people. There are a lot of people who are fundamentally healthy.

And sure, they may take their kids to well baby visits and things like that. But if everybody, you know, has major medical problems, then, you know, that insurance company is not not long for this for this world. And so you really need to keep that in mind. A good example, which I think should be compelling to people, is homeowners insurance or or automobile insurance. Home life health insurance.

Nobody wants to make a claim on certainly on their on their car insurance because they know that automatically their premiums are gonna go up, and there's gonna be more scrutiny about, your driving and everything else. Health insurance doesn't work that way. It could work that way, but it doesn't. Instead, it's well, okay. So you use you use services.

Fine. The only scrutiny would be, you know, to check whether a service that may be a little more expensive than usual is gonna be checked by the insurance company to deter to determine whether it's truly necessary or not. This is, you know, pre admission, screening. And for, you know, lots of things that are are can be expensive, but other things that may may not be that expensive but are easily abused, and I would say imaging is one of them. MRIs, from the standpoint of a patient, are completely painless and financially painless as well because I think, at least, the kind of insurance that most employers offer you, covers it.

You're you're you're gonna pay $20 or whatever it is, and it's, you know and so it's painless. You find out something, or you think you're gonna find out something that you need to know, that the doctor needs to know. And at a minimum, it's a low cost for peace of mind. I think that's the way a lot of people think about it. It's a gigantic cost to the system, which is the reason why all insurers in this country bear down on pre admission screening for MRIs because it is so easy to abuse.

It's a great profit center for the radiologist. It's a great profit center for the physician who prescribes this because, of course, that brings the patient back. There are lots of profit centers. There are very few hold on, let's not spend the money centers in the health sector. You know, it's it's it's surprising when you're when you're saying this.

I I know we talk about skin in the game and co pays and things like that. I've always, you know, had a deductible, and a lot of people that I know have deductibles so that they wait till the end of the year. I mean, if they've used up their deductible, then they schedule the more expensive things. What it sounds like you're saying is that most people don't have that they go it's it's right away, man. Boom.

First dollar the company pays for. No. I don't I don't think that's, what I'm what I'm trying to say. Okay. Yes.

Our deductibles have increased over the last few years. Basically, ever since the Affordable Care Act came into place, we've seen a rapid acceleration of deductibles. But that said, you know, if you're not in an ACA plan, then you you probably do not have a $10,000 deductible. You won't want a $5,000 deductible. But if you're living in a big city, a $5,000 deductible, and you have a couple of kids and you're middle aged, and you're actually gonna do all the tests that you're supposed to do, yeah.

You're gonna blow through that $5,000 pretty fast even if everybody's fundamentally healthy. But be that as it may, I think, especially for, you know, younger families with kids, I think the view is we've got the insurance. We really ought to use it. And I would say, yes, if we're using it in a way that's medically appropriate and not excessive. So that means while baby cares is important, but not every other week.

It's that sort of thing. So, Joe, when you look at the country and then you also look at the world, you certainly have opportunities for people to experiment with different system, whether or not it's the Danish model or The UK model or, you know, in America we have 50 states, so 50 laboratories theoretically. From an economic perspective, are you seeing or has anybody gotten this right or or certainly much better than us? Yeah. I I think the problem is that you can only make changes from where you are, not from where you are not.

So when people point to Europe in particular, we've never had that kind of a system. You know? Basically, our health insurance health system really is a post World War two system. Most, European countries, it's a post Bismarck era system. And so there's an element of what the population is willing to put up with in terms of controls Right.

By the government. Sure. In this country, as much as people on the left say they wanna expand government insurance, On the other hand, the way everybody acts with regard to the health sector is they don't really want to have anybody tell them what to do. They wanna do what they wanna do. So why not?

And so, you know, we've gotta work from work, from a system that we have rather than a system that we never had. And I think the the answer there is not so much you know, it's entirely possible for there to be a heavily government subsidized health insurance system that operate that could operate, well in this country, but it depends on what the rules are. So let's talk about the Affordable Care Act. The Affordable Care Act did some good things. It opened up insurance for a lot of people who couldn't afford it.

It did some bad things in that it required certain kinds of medical interventions that add cost to everybody that are, not lifesaving, but that everybody has to pay for. Now you could say, okay. That's fine. That's an insurance principle. But the real insurance principle is that people who are fundamentally healthy are gonna pay a little bit more so that people who are sick and really need something expensive get those expensive costs covered.

And instead, we have a system, not just because of the Affordable Care Act, but since the fifties, we have a system where we're basically not very good about covering the extremely high costs, but we're really great at covering the ordinary costs. You know, one of the things that should have been done, and we might go back to it, is to give people more choice under the Affordable Care Act. The Affordable Care Act is really kind of a narrow kind of a system, and not everybody needs the kind of insurance that the ACA, offers. Early on, the idea that I think Democrats had under the Obama administration was, well, we've we gotta make sure that everybody has great coverage. But the fact is that young people who are, you know, fundamentally healthy, don't wanna pay the cost of great insurance Right.

Because they're not gonna use it. And they also have the lowest level income in their lives. Sure. So it it discourages them from buying insurance. And so one of the worst things about the ACA is they said, okay.

Well, we're gonna make sure that we're not discriminated against older people. And so they said, well, instead of having the standard insurance industry rule that people older people say above 55, say, between 55 and 65, Medicare cuts kicks in at 55, so it's kind of a different world after that. But basically speaking, people used to pay five times people, in the in the 55 to 65 bracket used to pay roughly five times a premium for the same coverage as somebody, you know, between, 20 and 30 or something like that. And that made a lot of sense because, in fact, those young people, you know, this is was actuarial. This wasn't something made up by people pulling something out of the air.

This is based on actual utilization Sure. Typical costs. Younger people have we got less utilization and less dramatic utilization. Older people have more and more dramatic and more expensive, which is, of course, natural. That's the way it is.

So when we have an insurance system, what you don't do is you don't discourage young people from going in because you need them to help keep the system stable. Well, the ACA failed in that regard, and we still haven't solved that problem. There is an attempt, which is way too complicated and way too boring even for me to try to explain, to try to readjust the spending after the fact, that that system has basically failed for mostly technical reasons. The principles are great. You just can't implement it.

And so what you wanna do instead is avoid the problem in the first place while making it very attractive for young people to sign up for coverage. Well, and I know there's been talk in the past, like, for instance, young people, maybe they just need catastrophic coverage because they don't need the same kind of daily drugs and things that people on Medicare have. Are there other creative things that can be done to balance it out? Well, certainly, that's a that's a good point. I think having a wider range of insurance, I think, is really important.

You know, the ACA is really kind of aimed at what I would call lower middle class in terms of income people who have kind of middle class expectations, which is fine, which is fine. I mean, I think everybody should have expectations that they're not gonna go bankrupt going to the doctor. That is wholly inappropriate because what that means is that they will not take care of things that need to be taken care of that will not only harm them, maybe immediately, maybe in the future, but will also end up costing the system more. And that's what we want to avoid. Right?

But what can we do for younger people? Well, short term plan so called short term limit duration plans. These have been around for a long, long time. They were, very popular with people who caught between jobs and wanted to maintain coverage. The low premiums, the kind of coverage that you pick up that is gonna protect you from substantial cost, but it's not gonna encourage you to, you know, do you know, I got a scratch on the back of my hand.

I'm gonna go go to urgent care to see if I care about it. That's appropriate for some people, especially younger people. The Affordable Care Act really clamped down on that, and the net result was that there was actually a reduction in the number of people who had any form of coverage because the kind that people in those circumstances really wanted to buy, low cost, very basic, didn't commit them to anything very complicated and dramatic, that was cut off from them. This is an idea that's coming back again. It's certainly not gonna attract me.

It's not gonna attract the average person with, you know, employer sponsored coverage. It's not gonna attract people who are so poor that they're all eligible for Medicaid. It is going to attract people who are kind of not in any of those categories. I think it's gonna have it has a prospect of expanding reasonable coverage to people who need reasonable coverage at a price that is not outrageous. You know, we could do some other things that would really help too.

The Affordable Care Act has certain requirements that really raise the cost of coverage both to the people who have coverage, but also to also to the taxpayers. And one of those things, this is gonna be a little nerd nerd thing, but it it it brings up an important aspect of, the health system, that, is business. And that is that there is a requirement that ACA plans most devote of all of their total revenue. They must devote either 80 or 85%. It depends on certain circumstances.

Right. Let me just stay with 85%. They have to devote 85% of their total income from their insurance business to services, care you know, doctors visits, pay, you know, paying for their share of of medical services. And the other 15% is admin and profit. Okay.

Now I think to the somewhat naive people who thought this was a good idea fifteen years ago, they thought, well, this is going to actually limit the money grab by insurers. They got it completely wrong. Instead, what has happened is that it provides an incentive. It has encouraged insurers to buy up so called, pharmacy benefits managers. These are companies that, basically control the list of drugs that, your insurance will cover, and they actually, help set up what the co payment structure is.

And they also they do they do a lot of important things that insurers don't really wanna do because this is a complicated area that's different from the medical part of of health insurance. But they, of course, are basically selling their services to insurer. Now if the same corporate entity owns the insurance company and the pharmacy benefits manager, then there's an incentive for the pharmacy benefits manager, which is not bound by this 85% rule, to increase its administrative charges to the insurer, which means that there's more profit for the PBM, and the insurer stays within that 85% requirement. But it's the same corporate entity, so it's just shifting profit from one arm to the other. This is something that they didn't understand fifteen years ago, hasn't been discussed very much because it's so boring, and it's not the kind of thing that the average person thinks is is interesting to them.

And I would tend to agree that it probably isn't. But what it has done is it has really fueled the increase, not only in ACA prices. It's also driven up the cost of all of our coverage and not just drugs, hospital care, physician care, you name it. Everything has been driven by the fact that we have this system that really encourages one you might call gaming to maximize net profit for the larger entities. And it also means that smaller entities get eaten up by larger entities.

And so where is their competition in the health care sector? You know, we're we're we're beating it down the longer we go. There's a lot to unpack there, and we'll come back to it. Let let me ask you a question in terms of actuarially sound, you know, insurance. You you talked about auto insurance, and you talked about how if you get a ticket or if your your rates are not as good or you put a claim in, you know, your rates go up.

When it comes to health care in America today, we have a a lot of people that smoke. We have a lot of people that don't eat healthy. We have a lot of people that don't exercise. Are there real incentives built into and real penalties built into our insurance system so that our system is somewhat actuarially sound? And again, if not, is there any discussion taking place with these obviously very politically sensitive, you know, issues so that we actually can have the incentives built into the system in an appropriate way?

Yeah. I mean, we do some things, but it's really not that effective. And I think, you know, there are a couple of reasons for that. One is that no seller of goods or services in this country wanna tell their best customers you should stop doing something. And so we're the best customers in health care, sick people.

And so, yes, doctors doctors will if you go to a doctor, a doctor will and you're a smoker, a doctor will remind you, what your wife already told you. Stop smoking. Right. But in terms of kind of financial incentives, there have been some experiments with what I would consider to be really very small payments that are made to people who agree to a kind of a wellness program, that sort of thing. Insurers aren't good at it.

Government insurance programs are not good at it. The amount of money that they're willing to put in is pretty low. The psychological barriers facing the the individual person being you know, saying, you know, if you just get off the couch and do x number of steps a day, and we'll send you a pedometer so it'll it'll measure it. And you don't have to do anything. And then we'll we'll send you something.

We'll send you send you some money. Well, a, getting off the couch is the hard part. B, the financial incentive is pretty low compared to the psychological challenge of changing your behavior. Even your wife can't make you change your behavior. My wife tells me that on a daily basis.

So these kinds of things don't worry about. We don't have that kind of a culture. I mean, this is it's sort of odd, and it's getting worse. Thanks to, the miracle of computers, thanks to working at home, many people never have to get off the couch. Elsewhere, people do do more walking.

It's not because they they feel that it's for their health. It's just because their social structures kind of demanded of them. Our social structures say, well, you can drive yourself to the gym or to the tennis court, spend a half an hour or an hour there, and drive yourself back. You would never wanna walk there even if it's only, you know, a quarter of a mile. So we don't have a system that really encourages this.

Our social structure is not designed that way. And this is a modern thing, and it didn't used to be that way. But, you know, we're we're modern Americans. And, unfortunately, that means we're not doing the things that our parents and our grandparents used to do as a matter of course without even thinking about it. Well, if you look at life insurance and the government may or may not be, I mean, I assume is less involved in life insurance than they are in health insurance.

I mean, you pay a premium for your life insurance that is based on your life expectancy and your health at the time you buy life insurance. And so, I I mean, it seems to me at least I understand we're we're a democracy and we we wanna buy votes, but at the end of the day, I don't see how a system survives that's not based on actuarial principles. Well, life expectancy is built into all insurance, including including government insurance, or at least government subsidized insurance. Life expectancy is not built into premiums or cost sharing for the Medicare program or for or for Medicaid. Now I would say Medicare, maybe they get a pass.

We're talking about, generally, very low income people or disabled people. But Medicare, Medicare is, you know, middle class insurance for people over 65. Everybody has it. And the idea that the eligibility age is still 65 is really absurd given that life expectancy has, increased substantially over the last few decades. The a baby room generation, of course, is a classic example.

And I know the baby room generation is as much as at fault here as anybody else. I am a baby boomer, and so I accept our collective guilt. You know, I became eligible for Medicare at age 65. Now I'm healthy. Did I ever use any of it?

No. But, nonetheless, there are other people who, you know, either had a harder life or had genetic issues or whatever who, when they turned 65, they did use it. You know, it's it's viewed as an entitlement. It's viewed as I paid into the system. And so, therefore, it is my right.

Well, yes, in theory, that's true. But in reality, what we should have is is a system where the eligibility age, should increase with life expectancy, but also with work expectancy. In 1965, it probably was true that when you turned age 65, you were looking at the end of your career, and you were pretty close to looking at the end of your life too. Today, especially for jobs that are not heavy physical labor, You're looking at another ten, fifteen, twenty years of a career possibly until AI, of course, puts you out of work. Right.

But, you know, you you're gonna have a very productive, you know, decade or or maybe longer after age 65. And so just doing it with life expectancy isn't good enough. Now one thing we we did do, which makes us makes some sense in the Medicare program, is that in Medicare, you have a an entitlement, so called entitlement, for, what's called Part a, which covers hospital care and certain other institutional care. But then there's Part b, which covers essentially physician care and a few other things, and then Part d, which is drugs. And, so for part b and part d, we you have to if you wanna be in those programs, once you're 65, you have to pay pay, a premium.

So, one of the things that has changed is that now there is an income related premium. So if you are still working or whatever reason, you may maybe you just have a huge pension plan. But whatever whatever your taxable income is, if it's above certain levels and and accelerates with higher levels of income, then you're gonna pay a higher premium to participate in part b, which is physicians, or d, which is drugs. That's not an unreasonable thing, and it's a little bit it kind of edges up to my idea of of making it sort of a work specific eligibility program, but it but it doesn't quite work very well. And it does penalize some people who may have serious health problems, in particular, you know, things that require expensive drugs that may actually discourage them from signing up for for Part d.

And so it's a very complicated thing. There are easier ways to do things as usual with the Medicare program, and and the easier way is to start with eligibility and say, we're going to make you eligible according to reasonable rules. And one of the reasonable rules is where are you in terms of your health and your likelihood of being able to continue to work and your income. Those those are factors that ought to be taken into account. And what that would then do is it would not break any kind of a social contract with people.

It would just simply rationalize a program. And why is that? Well, because if you're a baby ruler and as opposed to your parents who died at the age of, let's say, early seventies, you're gonna move to 95. So you haven't lost anything. You just move the benefits down.

It's not an unreasonable thing to do. So, Joe, with our few remaining minutes, when you look at how hard it was for Obama to get the Obamacare passed in the first place, and if you look at the recent fights that Congress has had with respect to extending these supplements, for instance, is there any one large issue and fix that's being discussed that would have a material effect on health care that we can optimistically close on that you think is gonna take place in the next few years? Well, I don't see any hope for anything real, you know, during the next, two and a half years. Okay. It's just politics.

It's Republicans versus Democrats. I expect that Democrats will become majority, at least in the house. And, so nothing nothing substantial will will probably pass after this year. This year, I don't I don't see much of anything passing. There's a possibility that enough Republicans may may move over to the d side when it comes to the premium subsidies, I will consider that to be a really wonderful idea because that's just papering over some very fundamental problems Right.

With what we have. And, you know, you wanna burn, so applying money to it probably doesn't actually heal the burn. Right. And that's that's what they're talking about. The problem is that the kinds of things that need to be done, require a degree of thoughtfulness that preclude a two year legislative cycle.

But I think there's a vote for smaller things that people may say, well, you know, that doesn't sound like much, but it could be pretty substantial. A good example, which people who Democrats and Republicans have been talking about is stopping the practice that Medicare has of paying extra for services delivered in a physician's office an extra amount because that physician office is now owned by a hospital. Now there's a reason to pay more for the same service if it's actually being done in the hospital because the hospital has high overhead. And I don't just mean because they have marble lobbies. That's part of it.

But it's because, in fact, they have they do have a lot of overhead that, they have to cover a lot of additional cost. They have they have high powered specialists. They have a lot more personnel because they're having people stay over potentially for a long time, so you need a lot of staff at all levels. Sure. Doctor's offices don't have that.

And so what has happened is and this this really got a head of steam about, about fifteen years ago, and now it it's really a huge problem. Big hospitals realize there's a real golden opportunity to buy up these community practices. And, coincidentally, by the way, it made sense for the doctors who sold their practices because who were they? They were baby boomers, and they were getting into their they're in their sixties, generally, and they wanted to take a little step back. They didn't wanna do it all the time every weekend.

And so, you know, the step was to basically sell the the equity to the your favorite hospital. They would keep the doctor on for because they wanna keep the doctor as long as possible. He was the draw for the patients, or she is the draw for the patients. Right. But take some of the workload off.

Bring some other people in to pick up that workload. A woman with all of the billing stuff that the doctor never wanted to do, The hospital will do it at a premium. And so it it made sense for the doctors that did this. Perfect gig amount of sense for them. They got to get their equity back.

Sure. They got to ease their workload. Okay. The problem is the taxpayer is paying for this. Huge amounts of money for services that are no different.

They haven't changed at all. It's I'm I'm gonna call it waste. I'm not gonna call it abuse because these are Medicare's rules, so it can't be abusive if they're following the rules. But it is waste, and so we need to change the rules. And that is something that I think is on the list.

If anything passes this year, I think the idea of reducing that to some extent will be there. It's not gonna be an earth shaking amount of money because if it were earth shaking amount of money, it wouldn't pass. But it it's going to send a signal that Washington is beginning to look at these things that really are quite inappropriate as business practices, and we need to reform them in ways that are not, huge, but in more view to the right direction. Well, Joe, thank you for joining us today. This was great.

Complicated issues to for sure, but I do appreciate you taking the time to help our listeners better understand the challenges that we face. Well, thank you very much. I appreciate the opportunity. The POC Venture Capital Beyond is produced by CMG Advisors. If you enjoyed the conversation today and haven't yet subscribed to our show, you can find us on iTunes, Apple Podcasts, and SoundCloud.

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